The UK Budget Spring 2020 Has Been Taken as a Spur to Provide Economic Security During Temporary Economic Disruption
Chancellor Rishi Sunak presented his first budget on Wednesday 11 March 2020, first to be held in the spring since March 2017. The budget underlines all the challenges and unprecedented decisions based on the COVID-19 outbreak.
£12 billion budget has been announced for temporary unprecedented measures to provide security and stability for people and businesses in the UK. The budget portraits substantial support for the short-term economy as well as future investment. It is also a directive towards supporting individual cost of living, funds for business to sustain and economic prosperity. The budget highlighted the following sectors:
For Personal Tax including Self-Employed Individuals:
The budget announced the personal allowance rate at £12,500 (increase by CPI).
The basic tax rate imposed at 20% with the band of income taxable at this rate is £37,500 and 45% for individuals with income over £150,000.
For individuals taxed up to the basic tax rate will have an allowance of £1,000, higher rate taxpayers will have an allowance of £500 but there’s no allowance due to additional rate taxpayers. Here, the allowance refers to the allowance which applies to savings income and the available allowance in a tax year depending on the individual's marginal rate of income tax.
Tax for dividends is started at the rate of 0% for the first £2,000 of dividends, 7.5% for basic rate taxpayers, 32.5% for higher rate taxpayers and 38.1% for additional rate taxpayers.
To support self-employed, the government has announced to provide Statutory Sick Pay (SSP) in the forthcoming COVID-19 Bill.
Corporation tax rate remains 19%. The annual rate of capital allowances has increased from 2% to 3% and 100% first year allowance for investment in new plants and machineries within appointed areas.
For zero-emission vehicles, the extension is announced to 100% in the first year. Corporation tax relief for intangible fixed assets has received an extension.
A new 2% tax has been imposed upon the revenue of search engines, social media platforms and online marketplaces.
To support businesses battling COVID19, the government has announced a £25,000 Coronavirus Grant for Small Businesses. You can find out more about government measures for COVID-19 grants and benefits in our Guide for Small Business Owners.
Government launched a fundamental review of business rates which will report in the autumn.
For helping over half a million businesses in the UK the Employment Allowance for Employer National Insurance Contributions has increased from £3,000 to £4,000.
The Structures and Buildings Allowance for Corporation Tax has increased 1% giving relief on extra £100,000 for a building worth £10 million from next year.
To support entrepreneurs, a £28m package and up to 10,000 Start-Up Loans has been announced.
The UK government has postponed the reformation to the off-payroll working rules IR35 and extended to 6 April 2021.
For pubs, a discount has been introduced to take £5,000 off the business rates bills for pubs with a rateable value below £100,000.
The budget shares a motive to help people and businesses in the UK to boost back from the dreadful pandemic effect. It is however covering a very broad topic where you might need help from experts. If you are looking for any clarifications, you can speak to your local accountants. There are many small business accountants in London who have written articles, blogs and video presentations. We highly encourage you to follow your accountants to make sure you understand what you are eligible for what you can claim for.
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DISCLAIMER: The purpose of the blog is to provide information and insight regarding the situation. The readers must contact experts before making any decisions based on the information. We highly appreciate you to contact Taj Accountants for further assistance.